DCCI proposes raising tax-free income ceiling to Tk 500,000, what it means for taxpayers

The Dhaka Chamber of Commerce and Industry (DCCI) has proposed raising the tax-free income threshold to Tk 500,000 in the upcoming national budget for the 2026–27 fiscal year. It has also recommended reducing the maximum tax rate to 25 per cent.

The proposals were presented at a pre-budget discussion organised by the DCCI at the InterContinental Hotel in the capital on Monday.

According to the chamber, nearly 80 per cent of the country’s economy remains within the informal sector. As a result, a significant number of individuals remain outside the tax net, leading to substantial revenue losses for the government each year.

It suggested that automation and simplification of the tax system could help identify potential taxpayers and expand the tax base.

At present, the annual tax-free income threshold is Tk 375,000. In broad terms, this means that individuals earning less than this amount annually are not required to pay income tax.

If the threshold is raised to Tk 500,000, a substantial number of taxpayers, primarily from low- and middle-income groups, would be exempted from paying taxes.

With inflation currently hovering at around 8.5 per cent, the real income of many taxpayers has been eroded. Without an increase in the tax-free threshold, their financial burden would intensify.

The rising cost of essential goods has already increased household expenditures, and maintaining the existing threshold would further strain their finances by requiring them to pay taxes despite declining purchasing power.

An increase in the tax-free income ceiling to Tk 500,000 would therefore provide some relief to these lower- and middle-income taxpayers.

At the event, the DCCI put forward a total of 23 recommendations for implementation in the 2026–27 fiscal year. Among the major proposals were raising the tax-free income threshold to Tk 500,000, reducing the maximum tax rate to 25 per cent, and aligning the tax rate for non-listed companies with that of listed companies at 25 per cent.

It also recommended reforms in the import and VAT regimes, including the gradual abolition of advance tax for manufacturers and its reduction for commercial importers.

To modernise VAT collection, the chamber proposed introducing a mobile application alongside the existing web-based system.

Furthermore, it suggested completely eliminating the advance VAT system and imposing VAT solely on the final value. To enhance business liquidity, the DCCI also recommended simplifying the VAT refund process through the introduction of a ‘single-step’ or one-stop service mechanism.

The chief guest at the event was the Minister for Industry and Commerce, Khandakar Abdul Muktadir. Special guests included Monjur Hossain, a member of the General Economics Division (GED) of the Planning Commission, and Mahbubur Rahman, President of the International Chamber of Commerce (ICC) Bangladesh. The session was moderated by DCCI President Taskin Ahmed.

In his opening remarks, Taskin Ahmed stated that global economic uncertainty has deepened in the current context. In particular, ongoing tensions and conflicts in the Middle East have led to rising fuel prices, pressure on foreign exchange reserves, increased import costs, and disruptions in global supply chains—posing significant challenges for import-dependent economies such as Bangladesh.

He noted that these developments have already impacted production costs, transportation expenses, and overall inflation.

In this context, he emphasised the importance of formulating an effective, timely, and pragmatic budget.

He expressed the expectation that the upcoming budget would prioritise the purchasing power of citizens, the cost of living, and overall economic stability, alongside the interests of the business community.